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PM article in Business Day on trade and poverty in Africa

David Cameron's article in Business Day, 18 July 2011, on free trade and enterprise in Africa as a means of alleviating poverty.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

PM’s article in Business Day: Free trade in Africa shows a way out of poverty

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Fifty years ago, per capita gross domestic product (GDP) in South Korea was twice that of some African countries. Last year, it was nearly 40 times higher. But in the past decade sub-Saharan Africa was the third-fastest-growing region in the world, after China and India.

How does Africa build on this and close the gap for good? A big part of the answer is free trade within Africa. Freer trade in Asia gave Korea space to grow. African countries have not exploited opportunities to trade with each other.

Trade and enterprise have the power to change lives. What will lift tens of millions out of poverty in the long run is economic growth. And that means African countries buying from and selling to each other, doing business with one another and the world. The key to Africa’s progress is not just aid. What will save far more lives and do far more good is an African free trade area. It is time for some fresh thinking.

An African free trade area could increase GDP across the continent by about $62 billion a year. That’s $20 billion more than the world gives sub-Saharan Africa in aid. Backed by investment in people and infrastructure, sound government and effective tax systems, imagine what this would mean: businesses growing, new jobs on offer, families on the up, living standards transformed.

So we need to take on the obstacles to trade and growth. Despite recent strong economic growth in Africa, today just 12% of African trade is with other African countries. For much of the continent it is easier to trade with Europe or America than it is to trade with a neighbour. Infrastructure can be poor and overstretched, red tape endemic, and trade taxes stifling.

Africa has begun to respond to this challenge. Many non-tariff barriers in East and southern Africa have been eliminated. On the north-south corridor linking the southern half of the continent, more than 1400km of new road is being laid and prepared. Delays at Africa’s first one-stop border post, at Chirundu on the Zambia- Zimbabwe border, have been cut by almost two-thirds, saving truckers up to $600,000 a day.

We are determined to seize on this success. SA has taken on championship of the north-south corridor on behalf of the African Union. Nigeria will work with its partners in West Africa to liberalise trade with the ambition of Africa-wide free trade. Britain will invest more than £160m between now and 2015 in freeing up trade, including halving delays at 10 key border crossings. We need greater commitment throughout the continent to regional transport corridors.

But what will transform Africa’s potential in the end is truly pan-continental trade, underpinned by concrete agreements. With many African countries on the point of making the transition from dependence to sustained growth, regional trade is the golden key. That’s why last month, SA hosted a summit of 26 countries, representing 600-million people and more than half of Africa’s GDP. These leaders agreed to aim for a free trade area covering more than half the continent in just three years. Ecowas (the Economic Community of West African States) is also determined to develop its own free trade area, bringing Africa a step closer to the dream of an African economic community from shore to shore.

With a strong and unified voice in global trade, Africa can deliver a better deal for its citizens, and be a significant driver of growth for the world in future.

We need political leadership from all of Africa’s leaders to achieve this. As they show the vision and will to get this done, so real leadership is required from the rest of the world . Trade rules must be open and fair to all. When the Group of 20 meets in November, we will press for duty- and quota-free market access for the poorest countries, for sustained commitment to a global trade deal.

Never before has there been a time quite like this. The economic revolution under way has brought within reach the steps to eradicate poverty in Africa. It is now possible to imagine an Africa no longer dependent on aid, and a source of growth for the world. And the road to get there lies through freeing up the wealth-creating power of enterprise and trade.

This challenge falls to our generation of leaders. For too long borders have been allowed to hold Africa’s people back. It is time to make African free trade the common purpose of the continent and the world. To set Africa on a path to prosperity and stability would be a wonderful legacy from our generation to the next.

Published 18 July 2011